false--12-310001905824Q3trueCAWeighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.Purchases and Drawdowns may include securities received in corporate actions and restructurings.All investments are U.S. domiciled. Unless otherwise indicated, the interest rate on the principal balance outstanding for all floating rate loans is indexed to the Term Secured Overnight Financing Rate (“SOFR”), which typically resets semiannually, quarterly, or monthly at the borrower’s option. The applicable base rate may be subject to a floor. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over the reference rate based on each respective credit agreement. As of December 31, 2023, the reference rates for the floating rate loans were the 1 Month SOFR of 5.35%, 3 Month SOFR of 5.33% and 6 Month SOFR of 5.16%. Pledged as collateral against the credit facility. See Note 4. Borrowings in the Notes to Unaudited Consolidated Financial Statements for additional information. The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act’’). Under the 1940 Act, the Company cannot acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2023, total non-qualifying assets at fair value represented 16.0% of the Company’s total net assets calculated in accordance with the 1940 Act. The fair value of the investment was valued using significant unobservable inputs. See Note 6. Fair Value Measurements in the Notes to Unaudited Consolidated Financial Statements. All or a portion of the interest on this position is paid-in-kind (PIK).Represents co-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief received from the U.S. Securities and Exchange Commission. See Note 3. Related Party Transactions in the Notes to Unaudited Consolidated Financial Statements.Non-income producing security.Interest rates on short-term investments are annualized.Sales and Paydowns may include securities delivered in corporate actions and restructuring of investments.All investments are U.S. domiciled, unless otherwise indicated.The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act’’). Under the 1940 Act, the Company cannot acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2024, total non-qualifying assets at fair value represented 15.4% of the Company’s total net assets calculated in accordance with the 1940 Act.Unless otherwise indicated, the interest rate on the principal balance outstanding for all floating rate loans is indexed to the Term Secured Overnight Financing Rate (“SOFR”) or Euro Interbank Offered Rate (“EURIBOR”), which typically resets semiannually, quarterly, or monthly at the borrower’s option. The applicable base rate may be subject to a floor. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over the reference rate based on each respective credit agreement. As of September 30, 2024, the reference rates for the floating rate loans were the 1 Month SOFR of 4.85%, 3 Month SOFR of 4.59%, 6 Month SOFR of 4.25%, 1 Month EURIBOR of 3.35%, 3 Month EURIBOR of 3.11% and 6 Month EURIBOR of 3.28%.Investment is Germany domiciled. Investment is Spain domiciled. Amount excludes excess cash collateral paid, if any. Net amount represents the net amount due (to) from counterparty in the event of a default based on the contractual setoff rights under the agreement. 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Term Loan | SOFR + 4.000% | 8.845% | 12/11/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Diversified Manufacturing | TK Elevator Midco GmbH Facility B2 Loan | SOFR + 3.500% | 8.588% | 04/30/2030 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Entertainment | AP Core Holdings II, LLC Term B-2 Loan | SOFR + 5.614% | 10.46% | 09/01/2027 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Entertainment | SubCalidora 2 S.a r.l. Term Loan | EURIBOR + 5.750% | 9.34% | 08/14/2029 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Financial Other | Asurion, LLC B-12 Term Loan | SOFR + 4.250% | 9.095% | 09/19/2030 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | Cotiviti, Inc. Initial Term Loan | SOFR + 3.250% | 8.451% | 05/01/2031 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | Endurance International Group Holdings, Inc. Initial Term Loan | SOFR + 3.614% | 8.81% | 02/10/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | Mavenir Systems, Inc. Initial Term Loan | SOFR + 5.012% | 10.073% | 08/18/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | McAfee Corp. Term Loan | SOFR + 3.250% | 8.451% | 03/01/2029 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Packaging | Clydesdale Acquisition Holdings, Inc. Seven Year Term Loan | SOFR + 3.175% | 8.02% | 04/13/2029 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Packaging | LABL, Inc. Initial Dollar Term Loan | SOFR + 5.100% | 9.945% | 10/29/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Pharmaceuticals | Gainwell Acquisition Corp. Term B Loan | SOFR + 4.100% | 8.704% | 10/01/2027 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Retailers | LBM Acquisition, LLC Incremental Term Loan | SOFR + 3.850% | 8.968% | 06/06/2031 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | Cloud Software Group, Inc. Term Loan | SOFR + 4.000% | 8.604% | 03/30/2029 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | CoreWeave Compute Acquisition Co. IV, LLC Initial Term Loan | SOFR + 6.000% | 10.604% | 05/16/2029 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Financial Other | Nuvei Technologies Corp. Term Loan | SOFR + 3.000% | 8.326% | 07/21/2031 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Food and Beverage | Triton Water Holdings, Inc. Initial Term Loan | SOFR + 3.512% | 8.115% | 03/31/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Healthcare | U.S. Renal Care, Inc. Closing Date Term Loan | SOFR + 5.114% | 9.96% | 06/20/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Industrial Other | Apex Service Partners, LLC Delayed Term Loan | SOFR + 5.000% | 9.857% | 10/24/2030 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Insurance Life | Integrity Marketing Acquisition, LLC Incremental Term Loan | SOFR + 5.000% | 10.081% | 08/25/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | IT Services | Alorica, Inc. Term Loan | SOFR + 6.875% | 11.72% | 12/21/2027 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | Polaris Newco, LLC Dollar Term Loan | SOFR + 4.262% | 9.514% | 06/02/2028 2024-09-30 0001905824 Debt Investments | First Lien Senior Secured | Technology | Renaissance Holding Corp. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER:

814-01549

PIMCO Capital Solutions BDC Corp.

(Exact name of registrant as specified in its charter)


Delaware		87-4705230
(State of incorporation)		(I.R.S. Employer Identification No.)

650 Newport Center Drive

Newport Beach,

92660

(Address of principal executive offices)

(949)

720-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
—	—	—

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001 per share

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “

smaller

reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the

Exchange

Act). Yes ☐ No ☒

The issuer had 21,602,602 shares of common stock, $0.001 par value per share, outstanding as of November 13, 2024.

PIMCO CAPITAL SOLUTIONS BDC CORP.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2024

Table of Contents


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements		2

	Consolidated Statements of Assets and Liabilities as of September 30, 2024 and December 31, 2023 (Unaudited)		2

	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)		3

	Consolidated Statements of Changes in Net Assets for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)		4

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (Unaudited)		5

	Consolidated Schedules of Investments as of September 30, 2024 and December 31, 2023 (Unaudited)		6

	Notes to Unaudited Consolidated Financial Statements		11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		34

Item 4.	Controls and Procedures		35

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		36

Item 1A.	Risk Factors		36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		36

Item 3.	Defaults Upon Senior Securities		36

Item 4.	Mine Safety Disclosures		36

Item 5.	Other Information		36

Item 6.	Exhibits		37

SIGNATURES			38

PART I. FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

PIMCO Capital Solutions BDC Corp.

Consolidated Statements of Assets and Liabilities

(Amounts in thousands, except share and per share)

(Unaudited)


	September 30, 2024			December 31, 2023
Assets
Investments at fair value
Non-controlled, non-affiliated investments, at fair value (cost of $211,709 and $220,859, respectively)	$	208,185		$	215,975
Financial derivative instruments
Over the counter		9			—
Cash		934			2,306
Restricted cash		1,649			1,009
Foreign currency, at value (cost of $12 and $0, respectively)		10			—
Interest receivable		2,147			2,428
Receivable for paydowns of investments		129			59
Organizational costs paid by Advisor		—			194
Deferred financing fee		—			2,280

Total Assets	$	213,063		$	224,251

Liabilities
Debt (net of deferred financing cost)		11,559			—
Financial derivative instruments
Over the counter		32			—
Payable for investments purchased		100			—
Interest payable		1,123			325
Accrued administration fee		74			87
Organizational costs payable to Advisor		1,152			1,153
Offering costs payable to Advisor		20			20
Directors fee reimbursement to Advisor		154			152
Accrued legal fee		272			153
Accrued commitment fee		173			171
Other payable		302			140

Total Liabilities	$	14,961		$	2,201

Commitments & Contingencies (Note 8)
Net Assets
Common stock, $0.001 par value, 250,000,000 shares authorized, 21,602,602 and 25,387,884 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	$	22		$	25
Paid-in-capital in excess of par		220,619			253,745
Distributable earnings (loss)		(22,539	)		(31,720	)

Total Net Assets	$	198,102		$	222,050

Total Liabilities and Net Assets	$	213,063		$	224,251

Net asset value per share	$	9.17		$	8.75

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Statements of Operations

(Amounts in thousands, except share and per share)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Investment Income
From non-controlled, non-affiliated investments:
Interest income	$	3,089		$	4,003		$	11,737		$	14,053
Payment in-kind interest		2,785			2,952			6,031			6,327
Other income		45			45			147			54

Total investment income	$	5,919		$	7,000		$	17,915		$	20,434

Expenses
Management fee	$	620		$	753		$	1,878		$	2,233
Directors fee		42			61			128			184
Administration fee		74			90			223			268
Interest expense		1,634			63			2,261			70
Tax expense		40			21			124			22
Offering costs		—			—			—			10
Legal expenses		33			65			133			250
Other expenses		31			160			194			241
Recoupment of prior expenses paid by the Advisor		21			101			193			300

Total expenses	$	2,495		$	1,314		$	5,134		$	3,578
Less: Waivers (Note 3)		(620	)		(753	)		(1,878	)		(2,233	)

Net expenses		1,875			561			3,256			1,345
Net investment income (loss)	$	4,044		$	6,439		$	14,659		$	19,089

Net realized and unrealized gains (losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated investments		77			(15,073	)		(339	)		(32,995	)
Foreign currency		(15	)		—			(15	)		—

Total net realized gain (loss)		62			(15,073	)		(354	)		(32,995	)

Net change in unrealized appreciation (depreciation) from:
Non-controlled/non-affiliated investments		725			7,109			1,360			23,844
Over the counter financial derivative instruments		(23	)		—			(23	)		—
Foreign currency		(2	)		—			(2	)		—

Total change in unrealized appreciation (depreciation)		700			7,109			1,335			23,844

Net realized and unrealized gains (losses)		762			(7,964	)		981			(9,151	)

Net Increase (Decrease) in Net Assets Resulting from Operations	$	4,806		$	(1,525	)	$	15,640		$	9,938

Weighted average shares outstanding (basic and diluted)		21,602,602			25,387,884			21,934,160			25,387,884
Net Investment income (loss) per share (basic and diluted)	$	0.19		$	0.25		$	0.67		$	0.75
Earnings (loss) per share (basic and diluted)	$	0.22		$	(0.06	)	$	0.71		$	0.39

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Statements of Changes in Net Assets

(Amounts in

thousands

, except share and per share)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Increase (Decrease) in Net Assets Resulting from
Operations:
Net investment income	$	4,044		$	6,439		$	14,659		$	19,089
Net realized gain (loss)		62			(15,073	)		(354	)		(32,995	)
Net change in unrealized appreciation (depreciation)		700			7,109			1,335			23,844

Net Increase (Decrease) in Net Assets Resulting from Operations	$	4,806		$	(1,525	)	$	15,640		$	9,938

Distributions to stockholders from:
Distributable earnings		(3,250	)		(4,800	)		(6,350	)		(7,800	)

Total distributions to stockholders		(3,250	)		(4,800	)		(6,350	)		(7,800	)

Capital Share Transactions
Redemption of common shares	$	—		$	—		$	(33,238	)	$	—

Net Increase (Decrease) in Net Assets Resulting from
Capital Share Transactions	$	—		$	—		$	(33,238	)	$	—

Total Increase (Decrease) in Net Assets	$	1,556		$	(6,325	)	$	(23,948	)	$	2,138

Net Assets
Beginning of period	$	196,546		$	242,258		$	222,050		$	233,795

End of period	$	198,102		$	235,933		$	198,102		$	235,933

Capital Share Activity
Shares redeemed		—			—			(3,785,282	)		—

Net Increase (Decrease) in Shares Outstanding		—			—			(3,785,282	)		—

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)


	Nine Months Ended
	September 30, 2024			September 30, 2023
Cash Flows From Operating Activities:
Net Increase (Decrease) in Net Assets from Operations	$	15,640		$	9,938
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Purchases of long-term securities		(42,953	)		(35,907	)
Proceeds from sales of long-term securities		37,341			20,821
Sales (Purchases) of short-term portfolio investments, net		22,523			14,586
Net change in unrealized (appreciation) depreciation on investments		(1,360	)		(23,844	)
Net change in unrealized (appreciation) depreciation on over the counter financial derivative instruments		23			—
Net realized (gain) loss on investments		339			32,995
Payment in-kind interest		(6,031	)		(6,327	)
Net (accretion) on investments		(1,802	)		(2,105	)
Paydown (gain)		(267	)		(96	)
Amortization of deferred financing cost		202			70
Amortization of deferred offering costs		—			10
Increase/(decrease) in operating assets and liabilities:
(Increase) decrease in interest receivable		281			(760	)
(Increase) decrease in paydown receivable		(70	)		—
(Increase) decrease in organizational costs paid by Advisor		194			301
(Increase) decrease in due from affiliate		—			2
Increase (decrease) in due to affiliate		—			(435	)
Increase (decrease) in interest payable		798			—
Increase (decrease) in accrued administration fee		(13	)		(4	)
Increase (decrease) in organizational costs payable to Advisor		(1	)		—
Increase (decrease) in payable for investments purchased		100			—
Increase (decrease) in directors fee reimbursement to Advisor		2			(61	)
Increase (decrease) in accrued legal fee		119			250
Increase (decrease) in accrued commitment fee		2			—
Increase (decrease) in other payable		162			222
Increase (decrease) in other liabilities		—			185

Net cash provided by (used for) operating activities	$	25,229		$	9,841

Cash Flows From Financing Activities:
Proceeds from debt issuance	$	13,640		$	—
Redemption of common shares		(33,238	)		—
Distributions paid		(6,350	)		(7,800	)
Deferred financing fees paid		(3	)		(2,423	)

Net cash provided by (used for) financing activities	$	(25,951	)	$	(10,223	)

Net increase (decrease) in cash, restricted cash and foreign currency		(722	)		(382	)

Cash, restricted cash and foreign currency, beginning of period		3,315			800

Cash, restricted cash and foreign currency, end of period	$	2,593		$	418

Supplemental and Cash Flow Information:
Interest paid during the period	$	1,261		$	—
Tax expenses paid during the period	$	84		$	22

Supplemental and Non-Cash Information:
Exchange of investments		25,652			12,900

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Schedule of Investments as of September 30, 2024

(Amounts in thousands, except share amounts)

(Unaudited)


Investments (1) Non-Controlled, Non-Affiliated Investments	Reference Rate Spread (4)	Interest Rate			Maturity Date		Par Amount/ Shares		Cost		Fair Value		Percentage of Net Assets
Debt Investments
First Lien Senior Secured
Chemicals
Puris LLC Term Loan (3)(8)	SOFR + 5.750%		10.418	%		06/30/2031		4,868	$	4,796	$	4,863		2.45	%

Total Chemicals										4,796		4,863		2.45	%
Consumer Services
BCPE Empire Holdings, Inc. Term Loan (8)	SOFR + 4.000%		8.845	%		12/11/2028		4,978		4,987		4,986		2.52	%

Total Consumer Services										4,987		4,986		2.52	%
Diversified Manufacturing
TK Elevator Midco GmbH Facility B2 Loan (2)(10)	SOFR + 3.500%		8.588	%		04/30/2030		2,475		2,475		2,483		1.25	%

Total Diversified Manufacturing										2,475		2,483		1.25	%
Entertainment
AP Core Holdings II, LLC Term B-2 Loan	SOFR + 5.614%		10.460	%		09/01/2027		968		959		888		0.45	%
SubCalidora 2 S.a r.l. Term Loan (2)(3)(11)	EURIBOR + 5.750%		9.340	%		08/14/2029		2,384		2,522		2,601		1.31	%

Total Entertainment										3,481		3,489		1.76	%
Financial Other
Asurion, LLC B-12 Term Loan (8)	SOFR + 4.250%		9.095	%		09/19/2030		5,011		4,953		4,930		2.49	%
Nuvei Technologies Corp. Term Loan	SOFR + 3.000%		8.326	%		07/21/2031		100		100		99		0.05	%

Total Financial Other										5,053		5,029		2.54	%
Food and Beverage
Triton Water Holdings, Inc. Initial Term Loan (8)	SOFR + 3.512%		8.115	%		03/31/2028		4,987		4,987		4,984		2.52	%

Total Food and Beverage										4,987		4,984		2.52	%
Healthcare
U.S. Renal Care, Inc. Closing Date Term Loan	SOFR + 5.114%		9.960	%		06/20/2028		1,579		1,031		1,445		0.73	%

Total Healthcare										1,031		1,445		0.73	%
Industrial Other
Apex Service Partners, LLC Delayed Term Loan (3)	SOFR + 5.000%		9.857	%		10/24/2030		760		80		81		0.04	%

Total Industrial Other										80		81		0.04	%
Insurance Life
Integrity Marketing Acquisition, LLC Incremental Term Loan (3)	SOFR + 5.000%		10.081	%		08/25/2028		9,172		9,163		9,146		4.62	%

Total Insurance Life										9,163		9,146		4.62	%
IT Services
Alorica, Inc. Term Loan (3)	SOFR + 6.875%		11.720	%		12/21/2027		11,565		11,477		11,397		5.75	%

Total IT Services										11,477		11,397		5.75	%
Packaging
Clydesdale Acquisition Holdings, Inc. Seven Year Term Loan (8)	SOFR + 3.175%		8.020	%		04/13/2029		1,819		1,760		1,812		0.92	%
LABL, Inc. Initial Dollar Term Loan (8)	SOFR + 5.100%		9.945	%		10/29/2028		5,000		4,901		4,897		2.47	%

Total Packaging										6,661		6,709		3.39	%
Pharmaceuticals
Gainwell Acquisition Corp. Term B Loan (8)	SOFR + 4.100%		8.704	%		10/01/2027		2,221		2,207		2,119		1.07	%

Total Pharmaceuticals										2,207		2,119		1.07	%
Retailers
LBM Acquisition, LLC Incremental Term Loan (8)	SOFR + 3.850%		8.968	%		06/06/2031		2,211		1,856		2,172		1.09	%

Total Retailers										1,856		2,172		1.09	%
Technology
Cloud Software Group, Inc. Term Loan (8)	SOFR + 4.000%		8.604	%		03/30/2029		2,481		2,489		2,474		1.25	%
CoreWeave Compute Acquisition Co. IV, LLC Initial Term Loan (3)	SOFR + 6.000%		10.604	%		05/16/2029		851		851		854		0.43	%
Cotiviti, Inc. Initial Term Loan (3)	SOFR + 3.250%		8.451	%		05/01/2031		4,987		4,994		4,991		2.52	%
Endurance International Group Holdings, Inc. Initial Term Loan (8)	SOFR + 3.614%		8.810	%		02/10/2028		6,841		6,590		6,066		3.06	%
Mavenir Systems, Inc. Initial Term Loan (2)	SOFR + 5.012%		10.073	%		08/18/2028		9,750		9,679		6,579		3.32	%
McAfee Corp. Term Loan (8)	SOFR + 3.250%		8.451	%		03/01/2029		2,340		2,211		2,334		1.18	%

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Schedule of Investments as of September 30, 2024

(Amounts in thousands, except share amounts)

(Unaudited)


Investments (1) Non-Controlled, Non-Affiliated Investments	Reference Rate Spread (4)		Interest Rate (5)			Maturity Date		Par Amount/ Shares		Cost		Fair Value		Percentage of Net Assets
Debt Investments
First Lien Senior Secured
Technology (continued)
MH Sub I, LLC Term Loan (8)		SOFR + 4.250%		9.095	%		05/03/2028		2,475	$	2,399	$	2,462		1.24	%
Planview Parent, Inc. Incremental Term Loan (8)		SOFR + 3.750%		8.354	%		12/17/2027		6,858		6,871		6,871		3.47	%
Polaris Newco, LLC Dollar Term Loan (8)		SOFR + 4.262%		9.514	%		06/02/2028		2,382		2,323		2,345		1.19	%
Renaissance Holding Corp. Initial Term Loan		SOFR + 4.250%		9.095	%		04/05/2030		4,987		4,994		4,991		2.52	%

Total Technology											43,401		39,967		20.18	%

Wireless
Windstream Services, LLC Incremental Term Loan (3)		SOFR + 4.100%		8.945	%		02/23/2027		7,000		6,783		7,000		3.53	%

Total Wireless											6,783		7,000		3.53	%

Total First Lien Senior Secured											108,438		105,870		53.44	%

Second Lien Senior Secured
Chemicals
K2 Pure Solutions Nocal Holding Term Loan (3)(6)(9)		N/A		17.000	%		01/30/2029		5,241		4,854		5,145		2.60	%

Total Chemicals											4,854		5,145		2.60	%
Technology
Altar BidCo, Inc. Initial Term Loan		SOFR + 5.600%		10.399	%		02/01/2030		2,900		2,877		2,831		1.43	%

Total Technology											2,877		2,831		1.43	%

Total Second Lien Senior Secured											7,731		7,976		4.03	%

Senior Unsecured
Consumer Services
LEAF Home Solutions Note (3)(6)(8)		N/A		12.000	%		02/26/2027		36,219		36,127		35,192		17.76	%

Total Consumer Services											36,127		35,192		17.76	%
Technology
GCOM (3)(6)(9)		N/A		17.000	%		02/16/2029		15,084		12,649		12,971		6.55	%

Total Technology											12,649		12,971		6.55	%

Total Senior Unsecured											48,776		48,163		24.31	%

Total Debt Investments											164,945		162,009		81.78	%

Corporate Bonds
Automotive
Rivian Holdings/Auto LLC 144A (2)		SOFR + 5.625%		11.359	%		10/15/2026		18,601		18,433		18,834		9.51	%

Total Automotive											18,433		18,834		9.51	%

Total Corporate Bonds											18,433		18,834		9.51	%

Common Stocks
Chemicals
K2 Propco Class S Units (3)(7)(9)		N/A		N/A			N/A		897		285		421		0.21	%
K2 Pure Solutions Class S Units (3)(7)(9)		N/A		N/A			N/A		113		36		53		0.03	%

Total Chemicals											321		474		0.24	%
Retailers
West Marine/Rising Tide Holdings, Inc. (3)(7)		N/A		N/A			N/A		25,000		359		158		0.08	%

Total Retailers											359		158		0.08	%

Total Common Stocks											680		632		0.32	%

Warrants
Retailers
West Marine/Rising Tide Holdings, Inc. (3)(7)		N/A		N/A			09/08/2028		47,166		—		—		0.00	%

Total Retailers											—		—		0.00	%
Technology
GCOM (3)(7)(9)		N/A		N/A			08/11/2033		2,491,250		2,491		1,546		0.78	%

Total Technology											2,491		1,546		0.78	%

Total Warrants											2,491		1,546		0.78	%

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Schedule of Investments as of September 30, 2024

(Amounts in thousands)

(Unaudited)


Investments (1) Non-Controlled, Non-Affiliated Investments	Reference Rate Spread (4)		Interest Rate (5)			Maturity Date		Par Amount/ Shares		Cost		Fair Value		Percentage of Net Assets
Short-Term Investments
U.S. Treasury Bills
U.S. Treasury Bill		N/A		4.527	%		10/24/2024		3,200	$	3,190	$	3,190		1.61	%
U.S. Treasury Bill		N/A		4.586	%		10/29/2024		5,800		5,776		5,779		2.92	%
U.S. Treasury Bill		N/A		4.537	%		10/31/2024		8,500		8,466		8,467		4.27	%
U.S. Treasury Bill		N/A		4.592	%		11/12/2024		1,800		1,790		1,790		0.90	%
U.S. Treasury Bill		N/A		4.491	%		12/19/2024		2,500		2,475		2,475		1.25	%
U.S. Treasury Bill		N/A		4.490	%		12/24/2024		3,500		3,463		3,463		1.75	%

Total U.S. Treasury Bills											25,160		25,164		12.70	%

Total Short-Term Investments											25,160		25,164		12.70	%

Total Non-Controlled, Non-Affiliated Investments										$	211,709	$	208,185		105.09	%

Total Investments										$	211,709	$	208,185		105.09	%

(1)	All investments are U.S. domiciled, unless otherwise indicated.

(2)

The investment is treated as a

non-qualifying

asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act’’). Under the 1940 Act, the Company cannot acquire any

non-qualifying

asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2024, total

non-qualifying

assets at fair value represented 15.4% of the Company’s total net assets calculated in accordance with the 1940 Act.

(3)	The fair value of the investment was valued using significant unobservable inputs. See Note 6. Fair Value Measurements in the Notes to Unaudited Consolidated Financial Statements.

(4)

Unless otherwise indicated, the interest rate on the principal balance outstanding for all floating rate loans is indexed to the Term Secured Overnight Financing Rate (“SOFR”) or Euro Interbank Offered Rate (“EURIBOR”), which typically resets semiannually, quarterly, or monthly at the borrower’s option. The applicable base rate may be subject to a floor. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over the reference rate based on each respective credit agreement. As of September 30, 2024, the reference rates for the floating rate loans were the 1 Month SOFR of 4.85%, 3 Month SOFR of 4.59%, 6 Month SOFR of 4.25%, 1 Month EURIBOR of 3.35%, 3 Month EURIBOR of 3.11% and 6 Month EURIBOR of 3.28%.

(5)	Interest rates on short-term investments are annualized.

(6)	All or a portion of the interest on this position is paid-in-kind (PIK).

(7)	Non-income producing security.

(8)	Pledged as collateral against the credit facility. See Note 4. Borrowings in the Notes to Unaudited Consolidated Financial Statements for additional information.

(9)	Represents co-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief received from the U.S. Securities and Exchange Commission. See Note 3. Related Party Transactions in the Notes to Unaudited Consolidated Financial Statements.

(10)	Investment is Germany domiciled.

(11)	Investment is Spain domiciled.

ADDITIONAL INFORMATION

Foreign currency forward contracts (amounts in thousands):


Counterparty	Currency Purchased			Currency Sold			Settlement		Unrealized Appreciation (Depreciation)
Standard Chartered Bank		USD	2,546		EUR	2,310		10/2/2024	$	(25	)
Wells Fargo Bank, N.A.		EUR	1,008		USD	1,127		10/2/2024		(5	)
Royal Bank of Canada		EUR	1,001		USD	1,116		10/2/2024		(2	)
Wells Fargo Bank, N.A.		USD	1,129		EUR	1,008		11/4/2024		5
Royal Bank of Canada		USD	1,118		EUR	1,001		11/4/2024		2
Standard Chartered Bank		USD	338		EUR	301		11/4/2024		2

Total foreign forward currency contracts									$	(23	)

EUR Euro

USD U.S. Dollar

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Schedule of Investments as of December 31, 2023

(Amounts in thousands)


Investments (1) Non-Controlled, Non-Affiliated Investments	Reference Rate Spread (4)	Interest Rate			Maturity Date		Par Amount/ Shares		Cost		Fair Value		Percentage of Net Assets
Debt Investments
First Lien Senior Secured
Consumer Services
BCPE Empire Holdings, Inc. Extended Term Loan	SOFR + 4.750%		10.106	%		12/11/2028		2,494	$	2,496	$	2,504		1.13	%

Total Consumer Services										2,496		2,504		1.13	%
Diversified Manufacturing
TK Elevator Midco GmbH Facility B1 Loan	SOFR + 3.928%		9.381	%		07/30/2027		2,494		2,494		2,503		1.13	%

Total Diversified Manufacturing										2,494		2,503		1.13	%
Entertainment
AP Core Holdings II, LLC Term B-1 Loan	SOFR + 5.614%		10.970	%		09/01/2027		2,165		2,140		2,124		0.96	%
AP Core Holdings II, LLC Term B-2 Loan	SOFR + 5.614%		10.970	%		09/01/2027		2,231		2,205		2,184		0.98	%
PLNTF Holdings, LLC Initial Term Loan (8)	SOFR + 8.262%		13.633	%		03/22/2026		11,116		10,989		10,671		4.80	%

Total Entertainment										15,334		14,979		6.74	%
Financial Other
Asurion, LLC B-8 Term Loan	SOFR + 3.364%		8.720	%		12/23/2026		2,494		2,428		2,492		1.12	%

Total Financial Other										2,428		2,492		1.12	%
Healthcare
U.S. Renal Care, Inc. Closing Date Term Loan	SOFR + 5.356%		10.470	%		06/20/2028		1,591		977		1,213		0.55	%

Total Healthcare										977		1,213		0.55	%
Insurance Life
Integrity Marketing Acquisition, LLC Delayed Draw Term Loan (3)	SOFR + 6.000%		11.388	%		08/27/2026		3,691		3,691		3,671		1.65	%
Integrity Marketing Acquisition, LLC Incremental Term Loan (3)	SOFR + 6.000%		11.388	%		08/27/2026		5,528		5,417		5,498		2.48	%

Total Insurance Life										9,108		9,169		4.13	%
IT Services
Alorica, Inc. Term Loan (3)	SOFR + 6.875%		12.231	%		12/21/2027		12,250		12,137		11,999		5.40	%

Total IT Services										12,137		11,999		5.40	%
Packaging
Clydesdale Acquisition Holdings, Inc. Seven Year Term Loan (8)	SOFR + 4.275%		9.631	%		04/13/2029		2,203		2,122		2,215		1.00	%
LABL, Inc. Initial Dollar Term Loan	SOFR + 5.100%		10.456	%		10/29/2028		2,494		2,485		2,398		1.08	%

Total Packaging										4,607		4,613		2.08	%
Pharmaceuticals
Gainwell Acquisition Corp. Term B Loan (8)	SOFR + 4.100%		9.448	%		10/01/2027		2,238		2,221		2,182		0.98	%

Total Pharmaceuticals										2,221		2,182		0.98	%
Retailers
LBM Acquisition, LLC Initial Term Loan (8)	SOFR + 3.850%		9.206	%		12/17/2027		2,222		2,207		2,201		0.99	%
Rising Tide Holdings, Inc. FILO Term Loan (3)	SOFR + 9.000%		14.356	%		06/01/2026		4,570		4,426		4,406		1.98	%

Total Retailers										6,633		6,607		2.97	%
Technology
Endurance International Group Holdings, Inc. Initial Term Loan	SOFR + 3.928%		9.422	%		02/10/2028		6,894		6,594		6,772		3.05	%
Mavenir Systems, Inc. Initial Term Loan (2)	SOFR + 5.012%		10.390	%		08/18/2028		9,825		9,746		6,951		3.13	%
McAfee Corp. Term Loan (8)	SOFR + 3.850%		9.193	%		03/01/2029		2,352		2,241		2,348		1.06	%
MH Sub I, LLC Term Loan	SOFR + 4.250%		9.606	%		05/03/2028		2,494		2,405		2,456		1.11	%
Planview Parent, Inc. Closing Date Term Loan (8)	SOFR + 4.262%		9.610	%		12/17/2027		6,893		6,758		6,850		3.08	%
Polaris Newco, LLC Dollar Term Loan	SOFR + 4.114%		9.470	%		06/02/2028		2,400		2,331		2,371		1.07	%
TIBCO Software, Inc. Dollar Term Loan B	SOFR + 4.600%		9.948	%		03/30/2029		2,494		2,389		2,442		1.10	%

Total Technology										32,464		30,190		13.60	%
Wireless
Windstream Services, LLC Incremental Term Loan	SOFR + 4.100%		9.456	%		02/23/2027		7,000		6,725		6,930		3.12	%

Total Wireless										6,725		6,930		3.12	%

Total First Lien Senior Secured										97,624		95,381		42.95	%

Second Lien Senior Secured
Technology
Altar BidCo, Inc. Initial Term Loan	SOFR + 5.600%		10.813	%		02/01/2030		2,900		2,875		2,878		1.30	%

Total Technology										2,875		2,878		1.30	%

Total Second Lien Senior Secured										2,875		2,878		1.30	%

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Consolidated Schedule of Investments as of December 31, 2023

(Amounts in thousands)


Investments (1) Non-Controlled, Non-Affiliated Investments	Reference Rate Spread (4)		Interest Rate (5)			Maturity Date		Par Amount/ Shares		Cost		Fair Value		Percentage of Net Assets
Senior Unsecured
Consumer Services
LEAF Home Solutions Note (3)(6)(8)		N/A		12.000	%		02/26/2027		32,235	$	32,090	$	29,526		13.30	%

Total Consumer Services											32,090		29,526		13.30	%
Technology
GCOM (3)(6)(9)		N/A		17.000	%		02/16/2029		13,277		10,622		10,535		4.74	%

Total Technology											10,622		10,535		4.74	%

Total Senior Unsecured											42,712		40,061		18.04	%

Total Debt Investments											143,211		138,320		62.29	%

Corporate Bonds
Automotive
Rivian Holdings/Auto LLC 144A (2)		SOFR + 5.625%		11.493	%		10/15/2026		28,601		28,255		28,658		12.91	%

Total Automotive											28,255		28,658		12.91	%

Total Corporate Bonds											28,255		28,658		12.91	%

Common Stocks
Retailers
West Marine/Rising Tide Holdings, Inc. (3)(7)		N/A		N/A			N/A		25,000		359		263		0.12	%
Total Retailers											359		263		0.12	%
Total Common Stocks											359		263		0.12	%
Warrants
Retailers
West Marine/Rising Tide Holdings, Inc. (3)(7)		N/A		N/A			09/08/2028		47,166		—		—		0.00	%

Total Retailers											—		—		0.00	%
Technology
GCOM (3)(7)(9)		N/A		N/A			08/11/2033		2,491,250		2,491		2,181		0.98	%

Total Technology											2,491		2,181		0.98	%

Total Warrants											2,491		2,181		0.98	%

Short-Term Investments
U.S. Treasury Bills
U.S. Treasury Bill		N/A		0.000	%		01/02/2024		8,000		7,999		8,000		3.61	%
U.S. Treasury Bill		N/A		4.820	%		01/23/2024		6,200		6,180		6,181		2.78	%
U.S. Treasury Bill		N/A		5.094	%		02/20/2024		4,300		4,268		4,269		1.92	%
U.S. Treasury Bill		N/A		5.096	%		03/14/2024		27,200		26,911		26,918		12.12	%
U.S. Treasury Bill		N/A		5.137	%		03/28/2024		1,200		1,185		1,185		0.53	%

Total U.S. Treasury Bills											46,543		46,553		20.96	%

Total Short-Term Investments											46,543		46,553		20.96	%

Total Non-Controlled, Non-Affiliated Investments										$	220,859	$	215,975		97.26	%

Total Investments										$	220,859	$	215,975		97.26	%

(1)	All investments are U.S. domiciled.

(2)

The investment is treated as a

non-qualifying

asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act’’). Under the 1940 Act, the Company cannot acquire any

non-qualifying

asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2023, total

non-qualifying

assets at fair value represented 16.0% of the Company’s total net assets calculated in accordance with the 1940 Act.

(3)	The fair value of the investment was valued using significant unobservable inputs. See Note 6. Fair Value Measurements in the Notes to Unaudited Consolidated Financial Statements.

(4)

Unless otherwise indicated, the interest rate on the principal balance outstanding for all floating rate loans is indexed to the Term Secured Overnight Financing Rate (“SOFR”), which typically resets semiannually, quarterly, or monthly at the borrower’s option. The applicable base rate may be subject to a floor. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over the reference rate based on each respective credit agreement. As of December 31, 2023, the reference rates for the floating rate loans were the 1 Month SOFR of 5.35%, 3 Month SOFR of 5.33% and 6 Month SOFR of 5.16%.

(5)	Interest rates on short-term investments are annualized.

(6)	All or a portion of the interest on this position is paid-in-kind (PIK).

(7)	Non-income producing security.

(8)	Pledged as collateral against the credit facility. See Note 4. Borrowings in the Notes to Unaudited Consolidated Financial Statements for additional information.

(9)	Represents co-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief received from the U.S. Securities and Exchange Commission. See Note 3. Related Party Transactions in the Notes to Unaudited Consolidated Financial Statements.

The accompanying notes are part of these unaudited consolidated financial statements.

Table of Contents

PIMCO Capital Solutions BDC Corp.

Notes to Unaudited Consolidated Financial Statements

September 30, 2024

1. Organization

PIMCO Capital Solutions BDC Corp. (collectively with its consolidated subsidiaries, the “Company,” “we,” “our,” and “us”), is an externally managed,

non-diversified,

closed-end

management investment company that elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), on July 11, 2022. The Company was incorporated under the laws of the state of Delaware on December 23, 2021. In addition, for U.S. federal income tax purposes, the Company has elected as of August 1, 2022 to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company invests primarily in privately negotiated loans and equity investments to middle market companies generally with annual revenues greater than $20 million and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of less than $50 million. Pacific Investment Management Company LLC (“PIMCO” or the “Advisor”) serves as the Company’s external investment advisor pursuant to an investment management agreement (the “Advisory Agreement”). PIMCO is an investment advisor registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). PIMCO also serves as the Company’s administrator (in such capacity, the “Administrator”) pursuant to an administration agreement (the “Administration Agreement”). The Administrator may retain a

sub-administrator

to perform any or all of its obligations under the Administration Agreement.

The Company is conducting private offerings (each a “Private Offering”) of its common stock to investors in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At the closing of any Private Offering, each investor makes a capital commitment (a “Capital Commitment”) to purchase Shares (as defined below) pursuant to a subscription agreement (“Subscription Agreement”) entered into with the Company or PIMCO Capital Solutions US Feeder LP, a feeder fund established by the Advisor to invest in Shares of the Company (“Feeder Fund”). The Company is a perpetual-life investment vehicle, without a fixed termination date or commitment period. Investors will be required to fund drawdowns to purchase Shares up to the amount of their respective Capital Commitment on an

as-needed

basis each time the Company delivers a capital draw-down notice to its investors. The Company entered into an initial subscription agreement on June 9, 2022, received capital contributions on June 10, 2022 (date of inception), and commenced investment operations on June 30, 2022.

The initial meeting of the Board of Directors (the “Board”) of the Company was held on June 22, 2022. There were no operations prior to June 10, 2022 (date of inception). Effective June 10, 2022, affiliated entities of the Advisor (the “PIMCO Entities”) indirectly contributed $15 (amount in thousands) of capital to the Company by investing in interests of the Feeder Fund. In exchange for this contribution, the PIMCO Entities, through their interest in the Feeder Fund, each indirectly received common stock of the Company, par value $0.001 (“Shares”). On June 29, 2022, the PIMCO Entities made an additional capital contribution and, pursuant to Transfer Agreements entered into on June 30, 2022, the PIMCO Entities contributed additional assets to the Company with a fair market value of $143,864 and unrealized loss of $6,588 (amounts in thousands). As a result of these foregoing transactions, the Company issued and sold a total of 25,387,884 Shares at an aggregate purchase price of $253,879 (amount in thousands).

On January 25, 2024, the Company repurchased 3,785,281.95 shares of common stock, par value $0.001 per share from PIMCO Capital Solutions US Feeder LP for $33,238 (amount in thousands) at $8.78 per share in accordance with its offer to repurchase (the “Tender Offer”) its own shares up to the amount of shares that could be repurchased with approximately $40,000 (amount in thousands).

As of September 30, 2024, the Company had total Capital Commitments of $216,026 (amount in thousands), of which 0% is unfunded. Capital Commitments may be drawn down by the Company on a pro rata basis, as needed (including

follow-on

investments), for paying the Company’s expenses, including fees under the Advisory Agreement and Administration Agreement (as defined below), and/or maintaining a reserve account for the payment of future expenses or liabilities.

The Company’s fiscal year ends December 31.

2. Significant Accounting Policies

Basis of Accounting

The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. The functional and reporting currency for the Company is the U.S. dollar.

Table of Contents

The interim consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form

10-Q

and Articles 6, 10 and 12 of Regulation

S-X.

Accordingly, certain disclosures accompanying the annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2024, and its results of operations for the three months and nine months ended September 30, 2024 and 2023, and its cash flows for the nine months ended September 30, 2024 and 2023. The cons

olida

ted balance sheet at December 31, 2023, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.

Basis of Consolidation

As provided under ASC Topic 946 and Regulation

S-X,

the Company will generally not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries, Emerald CS LLC, Ruby CS LLC, Amber CS LLC, Citrine CS LLC, Diamond CS LLC, Opal CS LLC, Quartz CS LLC, Jade CS LLC, Pearl CS LLC, Sapphire CS LLC, Topaz CS LLC, Garnet CS LLC, Turquoise CS LLC, Aquamarine CS LLC, Tanzanite CS LLC, Peridot CS LLC, Cobalt CS LLC, Sunstone CS LLC and Silver CS LLC. All material intercompany transactions are eliminated in consolidation.

Fair Value of Investments

The Company applies fair value to all of its financial instruments in accordance with ASC Topic 820—Fair Value Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity-specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

Revenue Recognition

Securities transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled 15 days or more after the trade date. Realized gains and losses from securities sold are recorded on the identified cost basis. Dividend income is recorded on the

ex-dividend

date, except certain dividends from foreign securities where the

ex-dividend

date may have passed, which are recorded as soon as the Company is informed of the dividend. Tax liabilities realized as a result of such security sales are reflected as a component of net realized gain (loss) on investments on the Consolidated Statements of Operations. Paydown gains and losses on asset-backed securities are recorded as components of interest income on the Consolidated Statements of Operations.

Investments are placed on

non-accrual

status when it is probable that principal, interest or dividends will not be collected according to contractual terms. Interest or dividend payments received on

non-accrual

investments may be recognized as income or applied to principal depending upon management’s judgement.

Non-accrual

investments are restored to accrual status when past due principal and interest or dividends are paid and, in management’s judgement, principal and interest or dividend payments are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

Interest income and interest expense are recognized on an accrual basis. Interest income on debt instruments is accrued and recognized for those issuers who are currently paying in full or expected to pay in full. For those issuers who are in default or expected to default, interest is not accrued and is only recognized when received or applied to principal depending upon management’s judgement. Interest income and expense include discounts accreted and premiums amortized on certain debt instruments as determined in good faith by the Company and calculated using the effective interest method. Loan origination fees, original issue discounts and market discounts or premiums are capitalized as part of the underlying cost of the investments and accreted or amortized over the life of the investment as interest income.

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Paydown gains and losses on investments in debt instruments are reported in Interest income on the Consolidated Statements of Operations. The Company records dividend income from private securities pursuant to the terms of the respective investments.

The Company may earn various fees during the life of the loans. Such fees include, but are not limited to, syndication, commitment, administration, prepayment and amendment fees, some of which are paid to the Company on an ongoing basis. These fees and any other income are recognized as earned as a component of Other income, if applicable, on the Consolidated Statements of Operations. Certain commitment fees are deferred and included in Other Liabilities on the Consolidated Statements of Assets and Liabilities. The commitment fees are amortized over the life of the investment as other income.

Deferred Financing Fees

Deferred financing fees represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of September 30, 2024 and December 31, 2023, the Company had deferred financing costs of $

2,081

and $2,280, respectively (amounts in thousands). These amounts are amortized and included in interest expense in the Consolidated Statements of Operations over the life of the borrowings.

Payment

In-Kind

Interest

The Company may have investments that contain

Payment-In-Kind

(“PIK”) provisions. PIK income, computed at the contractual rate specified in the Company investment agreement, is added to the principal balance of the investment and recorded as Payment

in-kind

interest on the Consolidated Statements of Operations. The Company prospectively ceases recognition of PIK income and the associated principal balance if such amounts and balances are deemed to be doubtful of collection. For investments with PIK income, the Company calculates income accruals based on the principal balance including any PIK.

Organizational Costs

Organizational costs to establish the Company are charged to expense as incurred. These expenses consist primarily of legal fees and other costs of organizing the Company. The Advisor may elect to pay certain organizational costs of the Company on the Company’s behalf and for which the Company reimburses the Advisor. If the Company is dissolved prior to the full reimbursement of the organizational costs, the Advisor shall not seek reimbursement of any remaining amounts upon dissolution. The Company has entered into an Expense Support and Conditional Reimbursement Agreement (the “Expense Reimbursement Agreement”) with the Advisor pursuant to which the Advisor may elect to pay certain expenses on the Company’s behalf and the Company may be required to repay the Advisor from its excess operating funds until such time as all expenses made by the Advisor on behalf of the Company within three years have been reimbursed. These expenses consist primarily of legal fees and other costs of organizing the Company. As of September 30, 2024 and December 31, 2023, $0 and $194, respectively (amounts in thousands), were recoverable by the Advisor for organizational expenses paid on the Company’s behalf and are recorded as “Organizational costs paid by Advisor” on the Consolidated Statements of Assets and Liabilities. As of September 30, 2024 and December 31, 2023, $1,152 and $1,153, respectively (amounts in thousands), owed to the Advisor for organizational expenses paid on the Company’s behalf and are recorded as “Organizational costs payable to Advisor” on the Consolidated Statements of Assets and Liabilities.

Offering Costs

Offering costs in connection with the offering of common stock of the Company are capitalized as a deferred charge and amortized to expense on a straight-line basis over 12 months from the commencement of operations. The Advisor may elect to pay certain offering costs of the Company on the Company’s behalf and for which the Company may reimburse the Advisor pursuant to the Expense Reimbursement Agreement between the Company and Advisor. If the Company is dissolved prior to the full reimbursement of the offering costs, the Advisor shall not seek reimbursement of any remaining amounts upon dissolution. As of both September 30, 2024 and December 31, 2023, there were $0 recoverable by the Advisor for offering costs paid on the Company’s behalf. As of both September 30, 2024 and December 31, 2023, there were $20 (amount in thousands) owed to the Advisor for offering costs paid on the Company’s behalf, which were recorded as “Offering costs payable to Advisor” on the Consolidated Statements of Assets and Liabilities.

Other Expenses

All costs associated with consummated investments are included in the cost of such investments. Broken deal expenses incurred in connection with investment transactions which are not successfully consummated are expensed as a component of Other expenses on the Consolidated Statements of Operations. In addition, valuation, insurance, filing, research, consulting, subscriptions, directors’

out-of-pocket

expenses and other costs, are included as components of Other expenses on the Consolidated Statements of Operations and Other payables on the Statements of Assets and Liabilities.

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Legal Expense

Legal expenses are primarily for legal guidance related to investments, financing,

co-investment

matters and Board Member advice. These expenses are included as Legal expenses on the Consolidated Statement of Operations and Legal expenses payable on the Consolidated Statements of Assets and Liabilities.

Cash and Foreign Currency Translations

Cash is comprised of cash at the custodian bank. The consolidated financial statements of the Company are presented using the currency of the primary economic environment in which it operates. The functional and reporting currency for the Company is the U.S. dollar. Restricted cash is subject to a contractual restriction by a third party, including restriction of withdrawal and use until transferred to the operating account of the Company. The restricted cash is held at an account controlled by the Credit Facility servicer as disclosed in

Note 4. Borrowings

Amounts denominated in foreign currencies are translated into USD on the following basis: (i) investments and other assets and liabilities denominated in foreign currencies are translated into USD based upon currency exchange rates effective on the last business day of the period; and (ii) purchases and sales of investments, borrowings and repayments of such borrowings, income, and expenses denominated in foreign currencies are translated into USD based upon currency exchange rates prevailing on the transaction dates.

The Company does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included within the net realized and unrealized gains or losses on investments. Fluctuations arising from the translation of

non-investment

assets and liabilities, if any, are included with the net change in unrealized gains (losses) on foreign currency on the Consolidated Statements of Operations.

Foreign securities and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S. companies or U.S. government securities.

Cash, restricted cash and foreign currency consisted of the following as of September 30, 2024 and December 31, 2023. Foreign currency cost is disclosed on the Consolidated Statements of Assets and Liabilities.


	September 30, 2024		December 31, 2023
Cash	$	934	$	2,306
Restricted Cash		1,649		1,009
Foreign Currency		10		—

Total cash, restricted cash and foreign currency in the Consolidated Statement of Cash Flows	$	2,593	$	3,315

Derivatives

The Company may enter into foreign currency forward contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations in the value of foreign currencies. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another, at a

pre-determined

price at a future date. Foreign currency forward contracts are

marked-to-market

at the applicable forward rate. Unrealized appreciation (depreciation) on foreign currency forward contracts is recorded on the Consolidated Statements of Assets and Liabilities by the counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Notional amounts of foreign currency forward contract assets and liabilities are presented separately on the Consolidated Schedules of Investments. Purchases and settlements of foreign currency forward contracts having the same settlement date and counterparty are generally settled net and any realized gains or losses are recognized on the settlement date. The Company does not utilize hedge accounting and as such, the Company recognizes its derivatives at fair value, and records changes in the net unrealized appreciation (depreciation) on foreign currency forward contracts in the Consolidated Statements of Operations.

Income Taxes

The Company has elected, as of August 1, 2022, to be treated as a RIC under the Code and intends each year to qualify and be eligible to be treated as such, so that it generally will not be subject to U.S. federal income tax on its net investment income or net short-term or long-term capital gains, that are distributed (or deemed distributed, as described below) to stockholders. In order to qualify and be eligible for such treatment, the Company must meet certain asset diversification tests, derive at least 90% of its gross income for such year from certain types of qualifying income, and distribute to its stockholders at least 90% of its “investment company taxable income” as that term is defined in the Code (which includes, among other things, dividends, taxable interest and the excess of any net short-term capital gains over net long-term capital losses, as reduced by certain deductible expenses).

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The Company’s investment strategy will potentially be limited by its intention to continue qualifying for treatment as a RIC and can limit the Company’s ability to continue qualifying as such. The tax treatment of certain of the Company’s investments under one or more of the qualification or distribution tests applicable to RICs is uncertain. An adverse determination or future guidance by the Internal Revenue Service or a change in law might affect the Company’s ability to qualify or be eligible for such treatment.

If, in any year, the Company were to fail to qualify for treatment as a RIC under the Code and were ineligible to or did not otherwise cure such failure, the Company would be subject to tax on its taxable income at corporate rates and, when such income is distributed, stockholders would be subject to further tax on such distributions to the extent of the Company’s current or accumulated earnings and profits.

The Company accounts for income taxes in conformity with ASC Topic 740—Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are

“more-likely-than-not”

to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the

more-likely-than-not

threshold would be recorded as a tax expense or tax benefit in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material unrecognized tax benefits or unrecognized tax liabilities related to uncertain income tax positions through September 30, 2024. As of September 30, 2024, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are the years 2022-2023 (with limited exceptions), assuming tax filings have been made for the previous two years.

Distributions

Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from U.S. GAAP. Differences between tax regulations and U.S. GAAP may cause timing differences between income and capital gain recognition. Further, the character of investment income and capital gains may be different for certain transactions under the two methods of accounting. As a result, income distributions and capital gain distributions declared during a fiscal period may differ significantly from the net investment income (loss) and realized gains (losses) reported on the Company’s financial statements presented under U.S. GAAP.

The Company has adopted an “opt out” distribution reinvestment plan (“DRIP”). As a result, unless stockholders elect to “opt out” of the DRIP, stockholders will have their cash dividends or distributions automatically reinvested in additional Shares, rather than receiving cash. Shareholders who receive distributions in the form of Shares will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions; however, those stockholders will not receive cash with which to pay any applicable taxes.

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2023-07,

“Improvements to Reportable Segment Disclosures,” which enhances the disclosures required for reportable segments on an annual and interim basis. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and allows for early adoption with updates applied retrospectively. At this time, management is evaluating the implications of these changes on the consolidated financial statements. The Company does not expect the adoption of ASU

2023-07

to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU

2023-09,

“Improvements to Income Tax Disclosures,” which requires additional disaggregated disclosures on the entity’s effective tax rate reconciliation and additional details on income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024, and early adoption is permitted. At this time, management is evaluating the implications of these changes on the consolidated financial statements. The Company does not expect the adoption of ASU

2023-09

to have a material impact on its consolidated financial statements.

3. Related Party Transactions

Advisory Agreement

On June 30, 2022, the Company entered into an Advisory Agreement, pursuant to which the Company will pay the Advisor, quarterly in arrears, a base management fee calculated at an annual rate of 1.25%. The base management fee is calculated based on the average of the Company’s total net assets (including cash or cash equivalents but excluding assets purchased with borrowed amounts) as of the end of the two most recently completed calendar quarters. The base management fee for any partial month or quarter is appropriately prorated. The Advisor has agreed to waive all management fees payable pursuant to the Advisory Agreement for so long as the only stockholders of the Company are PIMCO Entities. The Advisory Agreement does not provide for the payment of incentive fees.

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For the three months ended September 30, 2024 and 2023, the Company incurred a management fee of $620 and $753, respectively (amounts in thousands), of which 100% was waived by the Advisor. For the nine months ended September 30, 2024 and 2023, the Company incurred a management fee of $1,878 and $2,233, respectively (amounts in thousands), of which 100% was waived by the Advisor.

Administration Agreement

On June 30, 2022, the Company entered into an Administration Agreement with PIMCO in its capacity as Administrator. Under the Administration Agreement, the Administrator provides or causes to be furnished certain supervisory and administrative and other services reasonably necessary for the operation of the Company. Pursuant to the Administration Agreement, the Company pays the Administrator an annual fee calculated and payable quarterly in arrears on the last business day of calendar quarter in an amount equal to 0.15% of the Company’s total net assets.

For the three months ended September 30, 2024 and 2023, the Company incurred an administration fee of $74 and $90, respectively (amounts in thousands). For the nine months ended September 30, 2024 and 2023, the Company incurred an administration fee of $223 and $268, respectively (amounts in thousands).

Expense Reimbursement Agreement

The Company has entered into an Expense Reimbursement Agreement with the Advisor. The Advisor may elect to make certain Expense Payments on the Company’s behalf, provided that no portion of the payment will be used to pay any of the Company’s interest expense. The Advisor has agreed to make Expense Payments on the Company’s behalf through June 30, 2025. During the three month period ended September 30, 2024 and the year ended December 31, 2023, the Advisor paid directors fees on behalf of the Company. As of September 30, 2024 and the year ended December 31, 2023, $154 and $152, respectively (amounts in thousands), are reimbursable to the Advisor for directors fees and are recorded as “Directors fee reimbursement to Advisor” on the Consolidated Statements of Assets and Liabilities.

Following any calendar year in which Available Operating Funds (defined below) exceed the cumulative distributions accrued to the Company’s stockholders based on distributions declared with respect to record dates occurring in such calendar year (the amount of such excess, “Excess Operating Funds”), the Company shall pay Excess Operating Funds, or a portion thereof, to the Advisor until such time as all Expense Payments made by the Advisor to or on behalf of the Company within three years prior to the last business day of such calendar year have been reimbursed. Any payments required to be made by the Company shall be referred to herein as a “Reimbursement Payment.” “Available Operating Funds” means the sum of (i) the Company’s net “investment company taxable income”, as defined by the Code, which generally includes net ordinary income and net short-term taxable gains reduced by net long-term capital losses, (ii) the Company’s net capital gains (including the excess of net long-term capital gains over net short-term capital losses) and (iii) distributions and other distributions paid to the Company on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above). No Reimbursement Payment for any calendar year will be made if the Company’s Operating Expense Ratio (defined below) at the time of such Reimbursement Payment is greater than the Operating Expense Ratio at the time the expense payment was made to which such Reimbursement Payment relates. The “Operating Expense Ratio” is calculated by dividing all of the Company’s operating costs and expenses incurred, as determined in accordance with U.S. GAAP for investment companies, less organizational and offering expenses, base management fees owed to the Advisor, and interest expense, by the Company’s average net assets.

The Expense Reimbursement Agreement may require the Company to repay the Advisor for previously waived reimbursement of Expense Payments under certain circumstances. The previously waived expenses are potentially subject to repayment by the Company, if at all, within a period not to exceed three years from the date of the relevant waiver.

For the three months ended September 30, 2024 and 2023, the Company waived organization costs of $0 and $0, respectively. For the nine months ended September 30, 2024 and 2023, the Company waived organization costs of $0 and $0, respectively.

For the three months ended September 30, 2024 and 2023, the Advisor recouped $21 and $101, respectively (amounts in thousands), from the Company for prior expenses paid and were recorded as “Recoupment of prior expenses paid by the Advisor” on the Consolidated Statement of Operations. For the nine months ended September 30, 2024 and 2023, the Advisor recouped $193 and $300, respectively (amounts in thousands), from the Company for prior expenses paid and were recorded as “Recoupment of prior expenses paid by the Advisor” on the Consolidated Statement of Operations.

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Directors Fee

The Company compensates each of its Independent Directors for their services. Their compensation is included in Directors fee on the Consolidated Statements of Operations. The Independent Directors also receive reimbursement of

reasonable out-of-pocket expenses

incurred in connection with attending each meeting, which are included as components of Other expenses on the Consolidated Statements of Operations and Other payables on the Statements of Assets and Liabilities.

Co-Investment

Relief

The Company has received exemptive relief from the SEC that, to the extent the Company relies on such relief, permits it to (among other things)

co-invest

with certain other persons, including certain affiliates of the Advisor and certain public or private funds managed by the Advisor and its affiliates, subject to certain terms and conditions. The exemptive relief from the SEC with respect to

co-investments

imposes extensive conditions on any

co-investments

made in reliance on such relief.

See

Note 1. Organization

for other related party transactions.

4. Borrowings

The Company is permitted to borrow amounts such that its asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing (if certain requirements are met). As of September 30, 2024 and December 31, 2023, the Company’s average asset coverage ratio was 1,813.83% and 0%, respectively.

The Company’s outstanding debt as of September 30, 2024 was as follows (amounts in thousands):


	September 30, 2024
	Aggregated Principal Committed		Outstanding Principal			Deferred Issuance Cost		Carrying Value			Amount Available
Credit Facility	$	100,000	$	(13,640	)	$	2,081	$	(11,559	)	$	86,360

Total	$	100,000	$	(13,640	)	$	2,081	$	(11,559	)	$	86,360

Credit Facility

On June 19, 2023, Amber CS LLC (the “Subsidiary”), as borrower and portfolio asset servicer, a wholly-owned financing subsidiary of the Company, Topaz CS LLC, as equity holder of Subsidiary, and Opal CS LLC and Quartz CS LLC, as Subsidiary guarantors, entered into a loan servicing agreement (the “Credit Facility”) with Massachusetts Mutual Life Insurance Company, as initial lender, administrative agent, facility servicer, and collateral custodian, and MassMutual Ascend Life Insurance Company, as initial lender. Under the Credit Facility, the maximum aggregate committed borrowing amount is $150,000 (amount in thousands) (the “Maximum Facility Amount”) with a scheduled maturity date of June 19, 2032. On June 10, 2024, the maximum aggregate committed borrowing amount was reduced to $100,000 (amount in thousands).

The facility bears interest at a rate of the applicable Benchmark plus (a) 2.85% for SOFR advances, and (b) 1.85% for an advance bearing interest at the alternate base rate which is a rate of interest per annum equal to the higher of (a) the Prime Rate in effect on such day; and (b) the Federal Funds Rate in effect on such day plus

0.5

% per annum (as such terms are defined in the Credit Facility). The facility bears an Unused Commitment Fee on the average daily unused amount in excess of the Minimum Usage Amount, if any, at a rate of .40% per annum (as such terms are defined in the Credit Facility). The Minimum Usage Amount is (a) zero prior to June 19, 2024, and (b) an amount equal to 70% of the Maximum Facility Amount (as such term is defined in the Credit Facility) any date on or after June 19, 2024. The Subsidiary pays a Utilization Fee (as such term is defined in the Credit Facility) for the difference between (a) the amount of interest that would have accrued under this Credit Facility on the principal amount of the advances if the advances outstanding was equal to the Minimum Usage Amount and (b) the amount of interest that actually accrued under this Credit Facility on the principal amounts of the advances. The Subsidiary also pays a Facility Servicer Fee in an aggregate amount equal to 0.03% per annum of the Maximum Facility Amount, an annual Collateral Custodian Fee (as such term is defined in the Credit Facility) of $5, an Agent Fee in an annual amount of $25, and a Rating fee of $175 for the initial rating and an annual fee of $45 thereafter (amounts in thousands).

The Credit Facility contains certain covenants including: (i) the Subsidiary acquiring a Debt Rating of

BBB-,

BBB (low) or Baa3 or higher and (ii) maintaining a loan to value less than minimums dictated by the number of assets in the portfolio. As of September 30, 2024, the Company is in compliance with these covenants.

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Certain investments, as disclosed on the Consolidated Schedule of Investments and their related cash flows, are pledged as collateral for the Credit Facility.

In connection with the establishment of the loan facility, the Company paid upfront fees and incurred legal expenses of $2,427 (amount in thousands), which are being amortized into interest expense through the scheduled maturity date of June 19, 2032. The Company had $13,640 (amount in thousands) of outstanding borrowings as of September 30, 2024. Interest expense, inclusive of Utilization Fees and other debt administration fees, related to the borrowings and amortization of deferred financing costs are disclosed as a component of interest expense on the Consolidated Statements of Operations. For the three months ended September 30, 2024 and 2023, the Company had interest expense of $1,634 and $63, respectively, inclusive of amortization expense for deferred financing fees of $68 and $63, respectively, utilization fee of $1,196 and $0, respectively, unused commitment fee of $38 and $0, respectively, debt administration fee of $56 and $0, respectively, and stated interest expense of $276 and $0, respectively (amounts in thousands). For the nine months ended September 30, 2024 and 2023, the Company had interest expense of $2,261 and $70, respectively, inclusive of amortization expense for deferred financing fees of $199 and $70, respectively, utilization fee of $1,374 and $0, respectively, unused commitment fee of $314 and $0, respectively, debt administration fee of $98 and $0, respectively, and stated interest expense of $276 and $0, respectively (amounts in thousands).

The combined weighted average interest rate of the aggregate borrowings outstanding for the nine months ended September 30, 2024 and the year ended December 31, 2023 was 67.72% and 0.00% and 8.28% and 0.00% attributable to stated interest, respectively. The combined weighted average debt of the aggregate borrowings outstanding for the nine months ended September 30, 2024 and the year ended December 31, 2023 was $4,460 and $0 (amounts in thousands).

5. Investments

Under the 1940 Act, the Company is required to separately identify

non-controlled

investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Under the 1940 Act,

“non-affiliated

investments” are defined as investments that are neither controlled investments nor affiliated investments. Detailed information with respect to the Company’s

non-controlled,

non-affiliated;

non-controlled,

affiliated; and controlled affiliated investments is contained in the consolidated financial statements, including the Consolidated Schedules of Investments. The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are

non-controlled,

non-affiliated;

non-controlled,

affiliated; or controlled affiliated investments.

Investments at fair value and cost consisted of the following as of September 30, 2024 and December 31, 2023:


	September 30, 2024				December 31, 2023
(Amounts in thousands)	Cost		Fair Value		Cost		Fair Value
First Lien Secured	$	108,438	$	105,870	$	97,624	$	95,381
Second Lien Secured		7,731		7,976		2,875		2,878
Senior Unsecured		48,776		48,163		42,712		40,061
Corporate Bonds		18,433		18,834		28,255		28,658
Common Stocks		680		632		359		263
Warrants		2,491		1,546		2,491		2,181
Short-Term Investments		25,160		25,164		46,543		46,553

Total investments	$	211,709	$	208,185	$	220,859	$	215,975

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The industry composition of investments as a percentage of total investments based on fair value as of September 30, 2024 and December 31, 2023 was as follows:


	September 30, 2024			December 31, 2023
Automotive		9.0	%		13.3	%
Chemicals		5.0	%		—	%
Consumer Services		19.3	%		14.8	%
Diversified Manufacturing		1.2	%		1.1	%
Entertainment		1.7	%		6.9	%
Financial Other		2.4	%		1.2	%
Food and Beverage		2.4	%		—	%
Healthcare		0.7	%		0.6	%
Industrial Other		0.1	%		—	%
Insurance Life		4.4	%		4.3	%
Packaging		3.2	%		2.1	%
Pharmaceuticals		1.0	%		1.0	%
Retailers		1.1	%		3.2	%
Technology		27.5	%		21.2	%
Treasury Bills		12.1	%		21.5	%
IT Services		5.5	%		5.6	%
Wireless		3.4	%		3.2	%

Total		100.0	%		100.0	%

As of September 30, 2024, 97.6% of investments held were based in the United States, 1.2% of investments held were based in Germany and 1.2% of investments were held in Spain.

As of December 31, 2023, 100.0% of investments held were based in the United States.

6. Fair Value Measurement

In accordance with ASC Topic 820, fair value is defined as the price that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability as of the reporting date.

Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation.

The three-tier hierarchy of inputs is summarized below:

•

Level 1 – Quoted prices in active markets for identical investments.

•

Level 2 – Other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).

•

Level 3 – Significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments at the reporting date).

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. If a fair value measurement uses price data vendors or observable market price quotations, that measurement may be a Level 2 or Level 3 measurement depending on the source of the base price. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. The determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

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Valuation of Investments

Investments are valued at fair value as determined in good faith by the Advisor, subject to the oversight of the Board, based on input from management and independent valuation firms that have been engaged to assist in the valuation of portfolio investments without readily available market quotations. This valuation process is conducted at the end of each fiscal quarter.

Common stocks, warrants and financial derivative instruments, such as futures contracts or options on futures that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy.

Investments for which market quotations are not readily available are valued at fair value as determined in good faith pursuant to Rule

2a-5

under the 1940 Act and ASC Topic 820. As a general principle, the fair value of a security or other asset is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Pursuant to Rule

2a-5,

the Board has designated PIMCO as the valuation designee (“Valuation Designee”) for the Company to perform the fair value determination relating to all Company investments. PIMCO may carry out its designated responsibilities as Valuation Designee through various teams and committees. The Valuation Designee’s policies and procedures govern the Valuation Designee’s selection and application of methodologies for determining and calculating the fair value of Company investments. The Valuation Designee may value Company portfolio securities for which market quotations are not readily available and other Company assets utilizing inputs from pricing sources, quotation reporting systems, valuation agents and other third-party sources (together, “Pricing Sources”).

The fair values of loan investments based upon pricing data vendors or observable market price quotations are generally categorized as Level 2 or Level 3. Loan investments priced using internal models with significant unobservable inputs are categorized as Level 3.

Short-term debt instruments (such as commercial paper) held by the Company having a remaining maturity of 60 days or less may be valued at amortized cost, so long as the amortized cost value of such short-term debt instruments is approximately the same as the fair value of the instrument as determined without the use of amortized cost valuation. These securities are categorized as Level 2 or Level 3 of the fair value hierarchy depending on the source of the base price. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter (absent unusual circumstances) assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuations in general market rates of interest on the value of the instrument.

If third-party evaluated vendor pricing is not available or not deemed to be indicative of fair value, the Company may elect to obtain broker quotes directly from the broker-dealer or passed through from a third-party vendor. In the event that fair value is based upon a single sourced broker quote, these securities are categorized as Level 3 of the fair value hierarchy. Broker quotes are typically received from established market participants. Although independently received, the Company does not have the transparency to view the underlying inputs which support the market quotation. Significant changes in the broker quote would have direct and proportional changes in the fair value of the security.

Discounted cash flow valuation uses an internal analysis based on the Advisor’s expectation of future income and expenses, capital structure, exit multiples of a security, and other unobservable inputs which may include contractual and factual loan factors, estimated future payments and credit rating. Significant changes in the unobservable inputs of the models would result in direct and proportional changes in the fair value of the security. These securities are categorized as Level 3 of the fair value hierarchy.

Proxy pricing procedures set the base price of a fixed income security and subsequently adjust the price proportionally to market value changes of a

pre-determined

security deemed to be comparable in duration, generally a U.S. Treasury or sovereign note based on country of issuance. The base price may be a broker-dealer quote, transaction price, or an internal value as derived by analysis of market data. The base price of the security may be reset on a periodic basis based on the availability of market data and procedures approved by the Valuation Oversight Committee. Significant changes in the unobservable inputs of the proxy pricing process (the base price) would result in direct and proportional changes in the fair value of the security. These securities are categorized as Level 3 of the fair value hierarchy.

The market approach generally involves multiplying a key performance metric of the company, such as earnings before interest, taxes, depreciation and amortization (“EBITDA”), by a valuation multiple observed in a range of comparable companies or transactions. The selection of a population of comparable companies requires judgment, including qualitative and quantitative analysis of the comparability of the companies. The Advisor may also adjust the valuation multiple for differences between the investment and the referenced comparable.

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A cost approach is generally used when a recent transaction price for a specific asset is indicative of fair value.

Due to the inherent uncertainty of valuations, however, estimated fair values may differ from the values that would have been used had a readily available market for the securities existed and the differences could be material.

The following tables summarize the fair value of the Company’s investments as of September 30, 2024 and December 31, 2023 (amounts in thousands):


	September 30, 2024
Assets	Level 1		Level 2		Level 3		Total
First Lien Senior Secured	$	—	$	64,938	$	40,932	$	105,870
Second Lien Senior Secured		—		2,831		5,145		7,976
Senior Unsecured		—		—		48,163		48,163
Corporate Bonds		—		18,834		—		18,834
Common Stocks		—		—		632		632
Warrants		—		—		1,546		1,546
Short-Term Investments		—		25,164		—		25,164

Total assets	$	—	$	111,767	$	96,418	$	208,185


	December 31, 2023
Assets	Level 1		Level 2		Level 3		Total
First Lien Senior Secured	$	—	$	69,807	$	25,574	$	95,381
Second Lien Senior Secured		—		2,878		—		2,878
Senior Unsecured		—		—		40,061		40,061
Corporate Bonds		—		28,658		—		28,658
Common Stocks		—		—		263		263
Warrants		—		—		2,181		2,181
Short-Term Investments		—		46,553		—		46,553

Total assets	$	—	$	147,896	$	68,079	$	215,975

Assets or liabilities categorized as Level 2 or Level 3 as of period end have been transferred between Level 2 and 3 since the prior period due to changes in the method utilized in valuing the investments. Transfers from Level 2 to Level 3 are a result of a change, in the normal course of business, from the use of methods used by Pricing Services (Level 2) to the use of a broker quote or valuation technique which utilizes significant unobservable inputs due to an absence of current or reliable market-based data (Level 3). Transfers from Level 3 to Level 2 are a result of the availability of current and reliable market-based data provided by Pricing Services or other valuation techniques which utilize significant observable inputs. In accordance with the requirements of U.S. GAAP, the amounts of transfers into and out of Level 3, if material, are disclosed in the tables below.

The below tables present a summary of changes in fair value of Level 3 assets by investment type (amounts in thousands) for the nine months ended September 30, 2024 and 2023:


	Beginning Balance at 12/31/2023		Net Purchases and Drawdowns		In-Kind Contributions		Net Sales and Paydowns			Accrued Discounts/ (Premiums)		Realized Gain/ (Loss)		Net Change in Unrealized Appreciation/ (Depreciation)			Transfers into Level 3		Transfers out of Level 3		Ending Balance at 9/30/24
Term Loans First Lien Secured	$	25,574	$	13,266	$	0	($	5,327	)	$	93	$	238	$	158		$	6,930	$	0	$	40,932
Term Loans Second Lien Secured		0		4,820		0		0			34		0		291			0		0		5,145
Term Loans Senior Unsecured		40,061		7,725		0		(1,935	)		266		7		2,039			0		0		48,163
Common Stocks		263		642		0		(320	)		0		0		47			0		0		632
Unlisted Warrants		2,181		0		0		0			0		0		(635	)		0		0		1,546

Totals	$	68,079	$	26,453	$	0	($	7,582	)	$	393	$	245	$	1,900		$	6,930	$	0	$	96,418

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	Beginning Balance at 12/31/2022		Net Purchases and Drawdowns (1)		In-Kind Contributions		Net Sales and Paydowns (2)			Accrued Discounts/ (Premiums)		Realized Gain/ (Loss)			Net Change in Unrealized Appreciation/ (Depreciation)			Transfers into Level 3		Transfers out of Level 3			Ending Balance at 9/30/23
Term Loans First Lien Secured	$	22,082	$	18,195	$	0	($	849	)	$	115	($	3,758	)	$	5,354		$	0	($	6,930	)	$	34,209
Term Loans Second Lien Secured		8,062		0		0		(5,945	)		36		(13,930	)		11,777			0		0			0
Term Loans Senior Unsecured		25,562		13,535		0		0			47		0			644			0		0			39,788
Common Stocks		0		359		0		0			0		0			(97	)		0		0			262
Unlisted Warrants		0		2,491		0		0			0		0			0			0		0			2,491

Totals	$	55,706	$	34,580	$	0	($	6,794	)	$	198	($	17,688	)	$	17,678		$	0	($	6,930	)	$	76,750

(1)	Purchases and Drawdowns may include securities received in corporate actions and restructurings.

(2)	Sales and Paydowns may include securities delivered in corporate actions and restructuring of investments.

The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 financial instruments. The tables are not intended to be

all-inclusive

but instead captures the significant unobservable inputs relevant to the Company’s determination of fair value (amounts in thousands).

Fair Value

as of

September 30, 2024

Valuation

Techniques

Unobservable

Input

Range

Weighted Average

(1)

Term Loans

31,404

Discounted Cash Flow

Discount Rate

8.71% – 19.00%

11.47%

14,592

Third Party Vendor

Broker Quote

98.00% – 100.06%

99.66%

Recent Transaction

Purchase Price

n/a

Senior Unsecured

48,163

Discounted Cash Flow

Discount Rate

13.71% – 22.12%

15.97%

Common Stocks

474

Comparable Multiple

EBITDA Multiple

n/a

5.75x

158

Discounted Cash
Flow/Comparable
Multiple

Discount
Rate/Revenue
Multiple

n/a

20.75

0.50x

Warrants

1,546

Comparable Multiple

EBITDA Multiple

n/a

10.00

9.50

Total Assets

96,418

Fair Value

as of

December 31, 2023

Valuation

Techniques

Unobservable

Input

Range

Weighted Average

(1)

Term Loans

25,574

Discounted Cash Flow

Discount Rate

10.67% – 16.39%

12.23%

Senior Unsecured

40,061

Discounted Cash Flow

Discount Rate

15.41% – 23.37%

17.50%

Common Stocks

263

Discounted Cash
Flow/Comparable
Multiple

Discount
Rate/Revenue
Multiple

n/a

17.25

0.55x

Warrants

2,181

Comparable Multiple

EBITDA Multiple

n/a

10.00

Total Assets

68,079

(1)	Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.

7. Derivatives

The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies.

In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or a similar agreement with its derivative counterparties. An ISDA Master Agreement is a bilateral agreement between the Company and a counterparty that governs

over-the-counter

derivatives, including foreign currency forward contracts, and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of a default

(close-out

netting) or similar event, including the bankruptcy or insolvency of the counterparty.

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For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Company and cash collateral received from the counterparty, if any, is included on the Consolidated Statements of Assets and Liabilities as other assets. There has been no cash collateral received or paid from the counterparty. The Company minimizes counterparty credit risk by only entering into agreements with counterparties that it believes to be in good standing and by monitoring the financial stability of those counterparties.

For the three and nine months ended September 30, 2024, the Company’s average USD notional exposure to foreign currency forward contracts was $8 and $3, respectively (amounts in thousands). For the three and nine months ended September 30, 2023, the Company’s average USD notional exposure to foreign currency forward contracts was $0 and $0, respectively.

The Company’s net exposure to foreign currency forward contracts that are subject to ISDA Master Agreements or similar agreements presented on the Consolidated Statements of Assets and Liabilities were as follows (amounts in thousands):


Reporting Date	Counterparty	Gross Amount of Assets		Gross Amount of Liabilities			Net Amount of Assets or (Liabilities)			Collateral(Received) Pledged (1)		Net Amounts (2)
September 30, 2024	Royal Bank of Canada	$	2	$	(2	)	$	—		$	—	$	—
September 30, 2024	Standard Chartered Bank	$	2	$	(25	)	$	(23	)	$	—	$	(23	)
September 30, 2024	Wells Fargo Bank, N.A.	$	5	$	(5	)	$	—		$	—	$	—

(1)	Amount excludes excess cash collateral paid, if any.

(2)	Net amount represents the net amount due (to) from counterparty in the event of a default based on the contractual setoff rights under the agreement. Net amount excludes any over-collateralized amounts.

There were no derivatives held at December 31, 2023.

The effect of transactions in derivative instruments on the Consolidated Statements of Operations was as follows (amounts in thousands):


	For the Three Months Ended					For the Nine Months Ended
	September 30, 2024			September 30, 2023		September 30, 2024			September 30, 2023
Net realized gain (loss) on foreign currency forward contracts	$	—		$	—	$	—		$	—
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts		(23	)		—		(23	)		—

Total net realized and unrealized gains (losses) on foreign currency forward contracts		(23	)		—		(23	)		—

8. Commitments & Contingencies

Commitments

The Company may enter into commitments to fund investments. As of September 30, 2024, the Advisor believed that the Company had adequate financial resources to satisfy its unfunded commitments, if any. The amounts associated with unfunded commitments to provide funds to portfolio companies are not recorded in the Company’s Consolidated Statements of Assets and Liabilities. Since these commitments and the associated amounts may expire without being drawn upon, the total commitment amount does not necessarily represent a future cash requirement.

As of September 30, 2024, the Company had the following outstanding commitments to fund investments in current portfolio companies (amounts in thousands):


Portfolio Company	Investment Type	September 30, 2024
Integrity Marketing Acquisition, LLC	Revolver	$	741
CoreWeave Compute Acquisition Co. IV, LLC	Delayed Draw Term Loan	$	4,149
Apex Service Partners, LLC	Delayed Draw Term Loan	$	675
Amber Acquisition Co, LLC—DwyerOmega	Term Loan	$	5,000

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Contingencies

In the normal course of business, the Company enters into contracts that provide a variety of general indemnifications. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

Litigation

As of the issuance date of this report, the Company is not named as a defendant in any material litigation or arbitration proceedings and is not aware of any material litigation or claim pending or threatened against it.

9. Net Assets

Equity Issuance

For the three months and nine months ended September 30, 2024, the Company’s authorized stock consisted of 250,000,000 Shares of common stock, par value $0.001 per share, and 1,000,000 shares of preferred stock, par value $0.001 per share.

The Company did not hold a closing of the continuous Private Offering for the three months or nine months ended September 30, 2024.

Distributions

For the nine months ended September 30, 2024, the Board declared the following distributions:

On May 22, 2024, the Company paid a dividend of $0.14 per share to stockholders of record as of May 20, 2024.

On August 22, 2024, the Company paid a dividend of $0.29 per share to stockholders of record as of August 20, 2024.

Share Repurchase Program

At the discretion of the Board, the Company may repurchase Shares (either by number of Shares or aggregate net asset value) as of such quarter end pursuant to a quarterly share repurchase program. Repurchases of Shares will be made at the current net offering price per Share on the date of such repurchase.

In the event the amount of Shares tendered exceeds the repurchase offer amount, Shares will be repurchased on a pro rata basis. All unsatisfied repurchase requests must be resubmitted in the next quarterly tender offer, or upon the recommencement of the Share repurchase program, as applicable.

On January 25, 2024, the Company repurchased 3,785,281.95 shares of common stock, par value $0.001 per share, from PIMCO Capital Solutions US Feeder LP for $33,238 (amount in thousands) at $8.78 per share in accordance with its offer to repurchase (the “Tender Offer”) its own shares up to the amount of shares that could be repurchased with approximately $40,000 (amount in thousands).

The Tender Offer expired on January 25, 2024 and $33,238 (amount in thousands) was paid to PIMCO Capital Solutions US Feeder LP on January 31, 2024. The Company did not repurchase any other Shares during the three or nine months ended September 30, 2024. For the three and nine months ended September 30, 2023, no Share repurchase was offered or requested and no Shares were repurchased.

10. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per common share for the three month periods and nine month periods ended September 30, 2024 and 2023:


	Three Months Ended					Nine Months Ended
	September 30, 2024		September 30, 2023			September 30, 2024		September 30, 2023
Net increase (decrease) in net assets resulting	$	4,806	$	(1,525	)	$	15,640	$	9,938
from operations
Weighted average shares of common stock outstanding - basic and diluted		21,602,602		25,387,884			21,934,160		25,387,884
Earnings (loss) per common share (basic and diluted)	$	0.22	$	(0.06	)	$	0.71	$	0.39

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11. Financial Highlights


	Nine Months Ended
	September 30, 2024			September 30, 2023
Per share data:
Net asset value, beginning of period	$	8.75		$	9.21
Net investment income (loss) (1)		0.67			0.75
Net realized and unrealized gain (loss) on investment transactions (2)		0.04			(0.36	)

Net increase (decrease) in net assets from operations (1)		0.71			0.39
Distributions declared (1)		(0.29	)		(0.31	)

Total increase (decrease) in net assets		0.42			0.08

Net asset value, end of period	$	9.17		$	9.29

Shares Outstanding, end of period		21,602,602			25,387,884
Total Return (3)		8.40	%		4.26	%
Ratios / supplemental data Ratio of expenses to average net assets, gross of waivers (4)(5)		3.46	%		1.97	%
Ratio of expenses to average net assets, net of waivers (4)(5)		2.18	%		0.72	%
Ratio of net investment income (loss) to average net assets (4)(5)		9.99	%		10.74	%
Net Assets, end of period	$	198,102		$	235,933
Weighted average shares outstanding		21,934,160			25,387,884
Total capital commitments, end of period	$	216,026		$	253,879
Weighted Average debt outstanding		4,459,926			—
Asset coverage ratio		1,813.83	%		—
Portfolio turnover rate (6)		22.23	%		10.30	%

(1)	Per share amounts are calculated based on the weighted average shares outstanding during the period.

(2)

Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value (“NAV”) per share for the period, and may not reconcile with the aggregate gains and losses in the Consolidated Statements of Operations due to share transactions during the period.

(3)	Total return is calculated as the change in NAV per share during the period, plus distributions per share, if any, divided by the NAV per share at the beginning of the period. Total return is for the period indicated and has not been annualized.

(4)	All expenses are annualized with the exception of organizational expenses.

(5)	Average net assets are computed using the average balance of net assets at the end of each month of the reporting period.

(6)	Not annualized.

12. Subsequent Events

Subsequent events after the Consolidated Statements of Assets and Liabilities date have been evaluated through the date the consolidated financial statements were issued. The Company has concluded that there are no events requiring adjustment or disclosure in the consolidated financial statements, except as discussed below.

On November 6, 2024, the Board declared a dividend of $0.08 per share, which is payable on November 22, 2024 to stockholders of record as of November 20, 2024.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements contained in this Form 10-Q (“Report”) (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of the Company and PIMCO. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. Certain information contained in this Report constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements.

The information contained in this section should be read in conjunction with “Item 1. Unaudited Consolidated Financial Statements.” Although the Company believes that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Report should not be regarded as a representation by us that the Company’s plans and objectives will be achieved. This discussion contains forward-looking statements, which relate to future events or the Company’s future performance or financial condition and involves numerous risks and uncertainties, including, but not limited to, those set forth in “Risk Factors” in Item 1A of this Report and elsewhere in this Report. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this Report. The Company does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.

The following factors are among those that may cause actual results to differ materially from the Company’s forward-looking statements:

•

the Company’s future operating results;

•

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets;

•

interest rate volatility;

•

the Company’s business prospects and the prospects of the Company’s prospective portfolio companies;

•

the impact of increased competition;

•

the Company’s contractual arrangements and relationships with third parties;

•

the dependence of the Company’s future success on the general economy and its impact on the industries in which the Company invests;

•

the ability of the Company’s prospective portfolio companies to achieve their objectives;

•

the relative and absolute performance of the Advisor;

•

the ability of the Advisor and its affiliates to retain talented professionals;

•

the Company’s expected financings and investments;

•

the Company’s ability to pay dividends or make distributions;

•

the adequacy of the Company’s cash resources;

•

the risks associated with possible disruptions due to terrorism in the Company’s operations or the economy generally;

•

the impact of future acquisitions and divestitures;

•

the Company’s regulatory structure and tax status as a business development company (“BDC”) and a regulated investment company (a “RIC”); and

•

future changes in laws or regulations and conditions in the Company’s operating areas.

Investors are advised to consult any additional disclosures that the Company makes directly to investors or through reports that the Company has filed or will file with the SEC, including our registration statement on Form 10 and our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Investors should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports that the Company files under the Exchange Act.

Overview

The Company is an externally managed, non-diversified, closed-end management investment company that elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”), on July 11, 2022. The Company was incorporated under the laws of the state of Delaware on December 23, 2021. In addition, for U.S. federal income tax purposes, the Company has elected, as of August 1, 2022, to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company’s investment objectives are to generate current income and to a lesser extent longer-term capital appreciation. The Company seeks to achieve its investment objectives by investing primarily in privately negotiated loans and equity investments to middle-market companies generally with annual revenues greater than $20 million and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of less than $50 million. To accomplish this, the Company plans to make direct investments in middle-market companies. The Company may make select investments in non-U.S. portfolio companies. The Company seeks to provide investors with access to:

•

a diversified portfolio of credit investments expected to provide stable income and high assurances of debt repayment;

•

current income distributions;

•

capital protection through defensive structures with affirmative, negative and financial maintenance covenants and active portfolio management;

•

assets of varying vintage, industry and geography through direct originations and acquisitions of loan portfolios; and

•

generally low volatility and low correlation to public market indices.

Without limiting the generality of the foregoing, the Company primarily invests in directly originated senior secured term loans including first lien senior secured term loans (including unitranche loans), second lien senior secured term loans, mezzanine debt, unsecured loans, other subordinated loans, and covenant-lite loans. The Company invests to a lesser degree in equity investments and other opportunistic asset purchases. The Company may engage in hedging transactions. The Company may also make investments in traded bank loans and other liquid debt securities of U.S. corporate issuers, including broadly syndicated loans, which may provide more liquidity than the Company’s private credit investments. Depending on various factors, including, without limitation, the Company’s cash flows, the state of the loan market, and the need to quickly ramp-up the Company’s portfolio, the Company expects that at times its liquid loan portfolio could represent a material portion of the Company’s portfolio.

The Company generates revenues primarily in the form of interest income from investments it holds. In addition, the Company generates income from dividends or distributions of income on any direct equity investments, capital gains on the sale of loans and equity securities and various other loan origination and other fees, including commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.

Key Components Of Our Results Of Operations

Investments

The Company’s level of investment activity can, does, and will vary substantially from period to period depending on many factors, including the amount of debt available to middle-market companies, the general economic environment and the competitive environment for the type of investments the Company makes.

Revenues

The Company generates revenue primarily in the form of interest income on debt investments it holds. In addition, the Company generates income from dividends or distributions on income on direct equity investments, capital gains on the sales of loans and equity securities and various loan origination and other fees. The Company’s debt investments generally have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark such as SOFR. Interest on these debt investments is paid quarterly. In some instances, the Company receives payments on its debt investments based on scheduled amortization of the outstanding balances. In addition, the Company may receive repayments of some of its debt investments prior to their scheduled maturity date. The frequency or volume of these repayments is expected to fluctuate significantly from period to period. The Company’s portfolio activity also reflects the proceeds of sales of securities. The Company may also generate revenue in the form of commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.

Investments are placed on non-accrual status when it is probable that principal, interest or dividends will not be collected according to contractual terms. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgement. Non-accrual investments are restored to accrual status when past due principal and interest or dividends are paid and, in management’s judgement, principal and interest or dividend payments are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

Expenses

The Company’s primary operating expenses include the payment of: (i) investment advisory fees to the Advisor pursuant to the Advisory Agreement between the Company and the Advisor (unless waived); (ii) administrative fees payable to the Administrator in performing its administrative obligations under the Administration Agreement between the Company and the Administrator; and (iii) other operating expenses as detailed below:

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salaries and other compensation or expenses, including travel expenses, of any of the Company’s executive officers, directors and employees, if any, who are not officers, directors, stockholders, members, partners or employees of PIMCO or its subsidiaries or affiliates;

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taxes and governmental fees, if any, levied against the Company;

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brokerage fees and commissions, and other portfolio transaction expenses incurred by or for the Company (including, fees and expenses of outside legal counsel or third-party consultants retained in connection with reviewing, negotiating and structuring loans and other investments made by the Company, and any costs associated with originating loans (such as third-party sourcing fees, due diligence expenses and travel, lodging and meal expenses related thereto), asset securitizations, alternative lending-related strategies and so-called “broken-deal costs” (e.g., fees, costs, expenses and liabilities, including, for example, due diligence-related fees, costs, expenses and liabilities, with respect to unconsummated investments));

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expenses related to SPVs (including, without limitation, overhead expenses related thereto);

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expenses of the Company’s securities lending (if any), including any securities lending agent fees, as governed by a separate securities lending agreement;

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costs, including interest expenses, of borrowing money or engaging in other types of leverage financing including, without limitation, through the use by the Company of reverse repurchase agreements, dollar rolls/buy backs, bank borrowings, credit facilities and tender option bonds;

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costs, including dividend and/or interest expenses and other costs (including, without limitation, offering and related legal costs, fees to brokers, fees to auction agents, fees to transfer agents, fees to ratings agencies and fees to auditors associated with satisfying ratings agency requirements for preferred shares or other securities issued by the Company and other related requirements in the Company’s organizational documents) associated with the Company’s issuance, offering, redemption and maintenance of preferred shares, commercial paper or other instruments (such as the use of reverse repurchase agreements, dollar rolls/buy backs, bank borrowings, credit facilities and tender option bonds) for the purpose of incurring leverage;

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fees and expenses of any underlying funds or other pooled vehicles in which the Company invests;

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expenses of any third party valuation agent engaged to assist in valuing the Company’s assets;

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dividend and interest expenses on short positions taken by the Company;

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extraordinary expenses, including extraordinary legal expenses, as may arise, including, without limitation, expenses incurred in connection with litigation, proceedings, other claims, and the legal obligations of the Company to indemnify its directors, officers, employees, stockholders, distributors, and agents with respect thereto;

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fees and expenses, including legal, printing and mailing, solicitation and other fees and expenses associated with and incident to stockholder meetings and proxy solicitations;

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organizational and offering expenses of the Company, including registration (including Share registration fees), legal, marketing, printing, accounting and other expenses associated with organizing the Company in its state of jurisdiction and in connection with the initial election of the Company to be regulated under the 1940 Act and, as applicable, the initial registration of its Shares under the Securities Act and fees and expenses associated with seeking, applying for and obtaining formal exemptive, no-action and/or other relief from the SEC;

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expenses incurred in connection with a stockholder that defaults in respect of a Capital Commitment;

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allocated costs incurred by PIMCO in providing managerial assistance to those companies in which the Company has invested who request it;

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all other expenses incurred by the Company in connection with maintaining its status as a BDC;

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expenses payable under any underwriting agreement, including associated fees, expenses and any indemnification obligations;

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any expenses allocated or allocable to a specific class of Shares, including, as applicable, sub-transfer agency expenses and distribution and/or service fees paid pursuant to a Rule 12b-1 or similar plan adopted by the Board of the Company for a particular share class (if any);

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the Company’s pro rata portion of the fidelity bond required by Section 17(g) of the 1940 Act, or other insurance premiums (including costs relating to directors’ and officers’ liability insurance and errors and omissions insurance);

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all fees, costs, expenses, and liabilities relating to currency hedging and portfolio hedging transactions;

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all fees, costs, expenses and liabilities of liquidating the Company;

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all fees, costs, expenses and liabilities that are specific to the operations of the Company; and

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all expenses of the Company that are capitalized in accordance with U.S. GAAP.

The Company reimburses the Administrator and Advisor or its affiliates for amounts paid or costs borne that properly constitute Company expenses as set forth in the Administration Agreement and Advisory Agreement or otherwise. The Company expects our general and administrative expenses to be relatively stable or to decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.

Portfolio, Investment Activity And Results Of Operations

As of September 30, 2024, the Company had investments, excluding cash equivalents, in 34 portfolio companies across 16 industries. Based on fair value as of September 30, 2024, approximately 71% of the Company’s debt portfolio was invested in debt bearing a floating interest rate, which are primarily subject to interest rate floors. Approximately 71% of the Company’s debt portfolio at fair value had an interest rate floor denoted in SOFR or EURIBOR. The weighted average interest rate floor across the Company’s floating-rate portfolio was approximately 0.7% as of September 30, 2024. These floors allow the Company to mitigate (to a degree) any impact of spread widening on the valuation of the Company’s investments. As of September 30, 2024, the Company’s estimated weighted average total yield of investments in debt securities was 11.2%. Weighted average yields are based on interest rates as of September 30, 2024.

As of December 31, 2023, the Company had investments, excluding cash equivalents, in 25 portfolio companies across 13 industries. Based on fair value as of December 31, 2023, 76% of the Company’s debt portfolio was invested in debt bearing a floating interest rate, which are primarily subject to interest rate floors. Approximately 76% of the Company’s debt portfolio at fair value had an interest rate floor denoted in SOFR. The weighted average interest rate floor across the Company’s floating-rate portfolio was approximately 0.7% as of December 31, 2023. These floors allow the Company to mitigate (to a degree) any impact of spread widening on the valuation of the Company’s investments. As of December 31, 2023, the Company’s estimated weighted average total yield of investments in debt securities was 11.9%. Weighted average yields are based on interest rates as of December 31, 2023.

As part of the monitoring process, the Advisor has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments. The Advisor has developed a classification system to group investments into four categories. The investments are evaluated regularly and assigned a category based on certain credit metrics. The Advisor’s ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments. Please see below for a description of the four categories of the Advisor’s Internal Risk Rating system:

Category 1 – In the opinion of the Advisor, investments in Category 1 involve the least amount of risk relative to the Company’s initial cost basis at the time of origination or acquisition. Category 1 investments performance is above the Company’s initial underwriting expectations and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company, or the likelihood of a potential exit.

Category 2 – In the opinion of the Advisor, investments in Category 2 involve a level of risk relative to the Company’s initial cost basis at the time of origination or acquisition. Category 2 investments are generally performing in line with the Company’s initial underwriting expectations and risk factors to ultimately recoup the cost of our principal investment are neutral to favorable. All new originated or acquired investments are initially included in Category 2.

Category 3 – In the opinion of the Advisor, investments in Category 3 indicate that the risk to the Company’s ability to recoup the initial cost basis at the time of origination or acquisition has increased materially since the origination or acquisition of the investment, such as declining financial performance and non-compliance with debt covenants; however, principal and interest payments are not more than 120 days past due.

Category 4 – In the opinion of the Advisor, investments in Category 4 involve a borrower performing substantially below expectations and indicate that the loan’s risk has increased substantially since origination or acquisition. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. For Category 4 investments, it is anticipated that the Company will not recoup the Company’s initial cost basis and may realize a substantial loss of the Company’s initial cost basis at the time of origination or acquisition upon exit.

The distribution of the Company’s portfolio, including cash equivalents, on the Advisor’s Internal Risk Rating System is as follows:


	September 30, 2024
	Fair Value (amounts in thousands)		% of Portfolio			Number of Portfolio Companies
Risk rating 1	$	—		—	%		—
Risk rating 2		201,606		96.8			34
Risk rating 3		6,579		3.2			1
Risk rating 4		—		—			—

	$	208,185		100	%		35


	December 31, 2023
	Fair Value (amounts in thousands)		% of Portfolio			Number of Portfolio Companies
Risk rating 1	$	—		—	%		—
Risk rating 2		214,762		99.4			25
Risk rating 3		1,213		0.6			1
Risk rating 4		—		—			—

	$	215,975		100	%		26

Consolidated Results Of Operations

The following table represents our operating results (amounts in thousands):


	For the Three Months Ended					For the Nine Months Ended
	September 30, 2024		September 30, 2023			September 30, 2024			September 30, 2023
Total investment income	$	5,919	$	7,000		$	17,915		$	20,434
Less: Net expenses		1,875		561			3,256			1,345

Net investment income (loss)		4,044		6,439			14,659			19,089

Net realized gain (loss)		62		(15,073	)		(354	)		(32,995	)
Net change in unrealized appreciation (depreciation)		700		7,109			1,335			23,844

Net increase (decrease) in Net Assets resulting from operations	$	4,806	$	(1,525	)	$	15,640		$	9,938

Investment income was as follows (amounts in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Investment income:
Interest income	$	3,089	$	4,003	$	11,737	$	14,053
Payment in-kind interest		2,785		2,952		6,031		6,327
Other income		45		45		147		54

Total Investment Income	$	5,919	$	7,000	$	17,915	$	20,434

For the three month periods and nine month periods ended September 30, 2024 and 2023, total investment income was driven by the Company’s deployment of capital and invested balance of investments. The size of the Company’s investment portfolio at fair value was approximately $200 million as of September 30, 2024 and, as of such date, all of the Company’s debt investments were income producing.

Interest income on the Company’s debt investments is dependent on the composition and credit quality of the portfolio. Generally, the Company expects the portfolio to generate predictable

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PIMCO Capital Solutions BDC Corp. 10-Q